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Top Story Lending Related

10/02/2020

CFPB assessment of TRID disclosure rule

The CFPB has released a report to Congress on its formal five-year assessment of its Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) Rule (the "TRID Rule"), which took effect October 3, 2015. In its assessment, the Bureau used both its own research and external sources to evaluate the effectiveness of the Rule in meeting (1) the purposes and objectives of the Bureau and (2) the specific goals of the Rule as stated by the Bureau prior to the Rule’s effective date.

Some highlights from Director Kraninger's message covering the report:

  • In laboratory testing, borrower understanding of mortgage transactions has improved due to their receipt of the required disclosures.
  • The TRID Rule appears to have created sizeable implementation costs for lenders and closing companies. Based on the industry surveys, a typical cost for a lender to implement the TRID Rule was $146 per mortgage originated in 2015, or roughly 2.0 percent of the average cost of originating a mortgage. Similarly, a typical cost for a closing company to implement the TRID Rule was $39 per closing in 2015, or about ten percent of the average cost of closing.
  • The TRID Rule’s effects on ongoing costs is less clear. Industry data indicate that mortgage lending costs have steadily increased over the past decade. However, the Bureau does not have any data that demonstrates how much, if any, of these increased costs are attributable to the TRID Rule.
  • The TRID Rule appears to have decreased mortgage originations and increased closing times, but these measures returned to pre-TRID Rule levels in a relatively short period of time.

10/02/2020

OCC Bulletins posted

The OCC yesterday posted two Bulletins:

  • Bulletin 2020-85 - "Current Expected Credit Losses: Final Rule" - announced the rule finalizing the interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL) by banks.
  • Bulletin 2020-86 - "Community Reinvestment Act: Small Bank Compliance Guide" includes a compliance guide for small banks, an initial illustrative list of qualifying activities, and a form to request consideration of items to be added to the list of qualifying activities

10/02/2020

OCC releases CRA ratings

The OCC has released a list of CRA performance evaluations that became public during September. Of the 12 evaluations made public this month, one is rated needs to improve, 10 are rated satisfactory, and one - Inwood National Bank, Dallas, Texas, was rated outstanding.

10/02/2020

OCC 2021 bank supervision operating plan

The OCC yesterday released its bank supervision operating plan for fiscal year 2021. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations.

Supervisory strategies for FY 2021 will focus on:

  • credit risk management, commercial and residential real estate concentration risk management, allowances for loan and lease losses, and allowances for credit losses
  • cybersecurity and operational resilience
  • BSA/AML compliance management
  • compliance risk management associated with 2020 pandemic-related bank activities
  • Community Reinvestment Act performance
  • fair lending examinations and risk assessments
  • the impact of a low-rate environment and preparation for the phaseout of LIBOR
  • proper oversight of significant third-party relationships
  • change management over significant operational changes
  • payment systems products and services

    10/02/2020

    Fed extends expansion of intraday credit

    The Federal Reserve Board yesterday extended to March 31, 2021, temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. These temporary actions: (1) suspend uncollateralized intraday credit limits (net debit caps) and waive overdraft fees for institutions that are eligible for the primary credit program; (2) permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps); and (3) suspend two collections of information that are used to calculate net debit caps.

    The Fed's temporary actions were due to expire on September 30, 2020.

    10/02/2020

    NMLS reminder on renewals

    The NMLS has posted a reminder that the NMLS 2021 annual renewal period for federal registrations begins November 1. According to federal regulations, all mortgage loan originators registered prior to July 1, 2020, must renew their registrations for 2021. The renewal period ends December 31.

    10/01/2020

    OCC updates TILA exam procedures booklet

    The OCC has issued Bulletin 2020-84 announcing its issuance of a revised "Truth in Lending Act" booklet of the Comptroller's Handbook to reflect revised interagency examination procedures adopted by the Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council (FFIEC). The Bulletin rescinds OCC Bulletin 2018-31, “Truth in Lending Act: Revised Comptroller's Handbook Booklet and Rescissions.”

    09/30/2020

    Operation Corrupt Collector announced

    The Federal Trade Commission, along with more than 50 federal and state law enforcement partners, has announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices. This crackdown encompasses more than 50 enforcement actions against debt collectors engaged in these illegal practices brought by the FTC, three federal partners, and partners from 16 states. The initiative, called Operation Corrupt Collector, includes five FTC law enforcement actions, including two newly announced cases and settlements in three prior actions. The two new FTC cases allege that companies were trying to collect debts they cannot legally collect or that a consumer does not owe—a practice known as phantom debt collection.

    09/30/2020

    Blanco encourages specificity in COVID-19-related SARs

    In remarks delivered yesterday during a virtual AML conference, FinCEN Director Kenneth Blanco encouraged attendees to read FinCEN's advisories related to COVID-10 medical fraud, imposter scams, and cyber-related crime. He said that the most common trend FinCEN is seeing in COVID-19 related SARs involves fraudsters targeting multiple COVID-19 related government stimulus programs, employing money mules and cyber techniques. The largest share of COVID-19 SARs addresses fraud against federal or state COVID-19 stimulus programs. Stimulus programs intended to benefit both individual taxpayers and small businesses have been targeted for fraud, with multiple Automated Clearinghouse (ACH) payments disbursed to a single account representing the most common financial pattern reported in SARs.

    Blanco recommended that SARs be specific in describing the activity being reported, to make them as useful as possible for law enforcement. Detailed information can help get SARs routed to the correct investigative team. For example, reports of medical scams like fake test kits, non-delivery of goods, and price gouging go to a specialized team of attorneys and investigators across the government. Specificity in the SAR about the fraudulent or suspicious medical aspects, both in the narrative and by checking box 34z, will get a SAR to this team more quickly.

    For consumer related fraud, especially targeting the elderly or other vulnerable individuals with a COVID-19 related scam, such as a fake COVID relief charity or bogus person-in-need scam, specificity in SARs is also encouraged. Using the SAR check box 38d for elder financial exploitation will expedite getting the SAR to the right team.

    Regarding SARs reporting suspected fraud in government programs, Blanco said vague references to “stimulus” or “CARES Act” or “benefit” in SARs hinder FinCEN's ability to get the information into the hands of the right team. The more specific filers are in their SAR narratives, the faster their reports will get to the right investigators. For example:

    • If the suspicious activity is related to an ACH payment from a state unemployment insurance program, filers should clearly mention COVID19 UNEMPLOYMENT INSURANCE FRAUD in field 2 of the SAR (Filing Institution Note to FinCEN) as well as in the narrative. This will make it much easier for the SAR to get to law enforcement teams working with the states on unemployment fraud.
    • If the activity involves a counterfeit check or ACH payment for the EIDL program, filers should clearly mention COVID19 EIDL FUNDS FRAUD in field 2 of the SAR and state this in the narrative, because there are specific prosecutorial teams working on EIDL fraud.

    Blanco said that, from February 1 to September 12, banks and credit unions filed over 64,000, or about 71 percent, of all COVID-19-related SARs.

    09/30/2020

    Supplemental September 2020 SLOOS

    The Federal Reserve has released the results of a supplementary Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) that was conducted to understand the experiences of domestically chartered banks with the Main Street Lending Program (MSLP). The survey consisted of a set of questions that focused on four areas:

    • commercial and industrial (C&I) loan inquiries and banks’ participation in the MSLP since mid-June, when lender registration started
    • banks’ outlook regarding their participation in the program
    • factors that may have shaped banks’ willingness to participate
    • characteristics of borrowers inquiring and receiving MSLP loans

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